Is this the end of free radio?
Performance Rights Act aims to end broadcast exemption from copyright royalties
‘‘Stop the radio tax. Keep radio free.’‘1 If you’ve heard these slogans, you probably know at least a little about the Performance Rights Act that is working its way through Congress. The bill, H.R. 848 in the House and S. 379 in the Senate, would eliminate an exemption from copyright royalties for terrestrial radio. In other words, AM/FM broadcasters would have to start paying record labels and artists for songs played over the air. The bill would also add new recordkeeping requirements that could increase administrative costs for stations.
Although the fee would amount to no more than $1,000 a year per station, that can be a difference-making amount for campus broadcasters scraping by on shoestring budgets. But the issue of what is fair compensation for the owners of sound recordings is a complex one. While broadcasters may be tempted to cry ‘‘First Amendment’‘ and fire off angry letters to Congress, the copyright interests of recording artists, too, are rooted in the Constitution.2
At its core, this is an economic fight featuring two heavyweights, with commercial radio and the music industry advocating fiercely for their interests and presenting starkly different pictures of the issue. The music industry, still struggling to develop a successful digital music business model, claims the old system of generating income through recorded music distribution and concerts cannot compete as music downloading takes a significant bite out of recorded music sales. In this new economy, the industry says it no longer makes sense to view radio as a means of free advertising powerful enough to justify an exemption from sound recording copyright laws.3
Commercial radio is in better financial shape than the music industry, but it is struggling to find and keep advertisers in this economy.4 Advocates for commercial radio argue that it still provides tremendous exposure for the music industry.5 They also point to terrestrial radio’s long history of paying copyright fees to songwriters or publishers but not artists and record labels. Finally, some commentators argue that the music industry misplaces its effort by continuing to focus on an old technology for financial deliverance instead of focusing on how best to generate revenue online.6
What follows is an introduction to the copyright issues facing student broadcasters in a technologically diverse and evolving environment. Along with a brief history of recording copyright, this article examines both the House and Senate versions of the Performance Rights Act and provides some basic advice on how to best advocate as student broadcasters. Finally, it concludes by putting the debate surrounding radio copyright fees in the broader context of an industry transitioning toward a digital future.
Context and History
It might be helpful to start this review by thinking about what it is that copyright laws attempt to protect. Copyright law is intended to promote creative and artistic work by giving the creator of the work control over its reproduction. In the United States, there are two important categories of copyright protection for music. The first category involves the underlying musical work,7 and the second category protects the recording itself.8 Modern music highlights this distinction, because many artists do not write all of their own songs. When the act of composing the music and writing the lyrics for a song is separated from the work of developing an artist’s sound and style, it becomes easier to see why music demands more than one type of copyright protection.
Like literature, drama, and art, musical composition is a traditional example of copyright protection.9 Copyright protection for musical works includes the melody and lyrics of the work. The right to enforce the copyright belongs to the author or composer of the music. Authors and composers usually assign the rights for their musical works to a publisher, who typically licenses the work to an organization that represents a number of authors and composers, a performance rights organization (PRO).10 The American Society of Composers, Authors, and Publishers (ASCAP), which was established in 1914, is one of the oldest PROs in the United States.11 The other two major PROs in the United States are Broadcast Music, Incorporated (BMI) and the Society of European Stage Authors and Composers (SESAC).12 These organizations issue blanket licenses to venues like restaurants and bars for permission to perform all the songs in the organizations’ catalog.13 Television and radio stations also make royalty payments to PROs for the right to air the songs by the organization’s members.14
Within the category of musical works, there are two types of licenses available, performance and mechanical. A performance license is required when a musical work is performed publicly.15 Both live performances and transmissions of musical works are considered performances.16 For example, concert venues, restaurants, and radio stations all pay for performance licenses. On the other hand, mechanical licenses are required for the reproduction and distribution of musical works recorded in a tangible medium, such as vinyl record, tape or CD.17
Unlike musical work copyrights, which can protect multiple versions of an author’s or composer’s lyrics or music, sound recording copyrights attach to specific versions of a song and protect the recording itself. The sound recording copyright typically belongs either to the artist or artists on the recording or, more often, to the record label.18 Sound recordings were given federal copyright protection for reproduction and distribution in 1971.19 A master recording license is required to reproduce and distribute a sound recording.20 While the recording industry sought performance protection for sound recordings in the 1970s as well, broadcasters and PROs were able to prevent the addition of performance rights for sound recordings at the time.
However, the growth of digital technology in the 1990s reignited the music industry’s push for a performance right in sound recordings by the music industry. In 1995, the Digital Performance Right in Sound Recordings Act (DPRSRA) extended a performance right to the digital audio transmission of recordings on subscription-based services.21 The DPRSRA primarily affected subscription based internet music sites and satellite radio. Three years later, the Digital Millennium Copyright Act (DMCA) extended the performance right for sound recordings to all digital audio transmissions, which exposed webcasters to sound recording copyright fees.22 Many in the music industry now claim there is no reason traditional broadcasters should continue to avoid paying sound recording royalty fees when comparable services, like satellite and internet radio, do pay performance fees to sound recording copyright holders.
The Performance Rights Act may be causing you to experience deja vu if your station also webcasts its programs. In 2007, small webcasters reached an agreement with the music industry for a discounted rate on digital music royalties.23 The agreement was the culmination of nearly a decade of legislation, litigation and negotiations in the wake of the DMCA.24 Removing the exemption from sound recording performance copyright fees for webcasters forced some online stations out of business. Some broadcast stations chose to stop webcasting their programs. The Performance Rights Act renews the question of whether broadcasters should continue streaming their content online, and could push more stations to choose one means of transmission or the other.
Details of the Bills
Reading a bill like the Performance Rights Act can be like listening to one side of a conversation without hearing the other. The bill does not explicitly say that traditional radio stations must now pay performance copyright fees, but that would be its practical impact.
Section 2 of the Performance Rights Act illustrates how to read the bill in conjunction with the Copyright Act, which is found in Title 17 of the U.S. Code. For example, Section 106(6) of Title 17 now gives the copyright holder of a sound recording the right to control public performances through ‘‘digital audio transmission of the work.’‘25 In both the House and Senate version of the bill, Section 2(a) of the Performance Rights Act amends Section 106(6) to include the performance of the copyrighted work ‘‘publicly by means of an audio transmission.’‘26 The effect of this change is to expand Section 106(6) from digital audio transmissions to audio transmission generally, including traditional broadcast transmissions. Similarly, Section 2(b) of the bill changes the language in Section 114 of Title 17 from ‘‘digital audio transmissions’‘ to ‘‘an audio transmission.’‘27 You probably do not need to read the bill side-by-side with the Code, but knowing that the bill is merely adding to or changing existing law is essential to understanding the bill.
Section 2 of the Performance Rights Act also removes ‘‘nonsubscription broadcast transmission’‘28 — traditional radio — from a list of exemptions from sound recording performance copyright protection that now appears in Section 114(d)(1) of the Code. These changes accomplish the primary purpose of the bill by extending sound recording copyright protection for performances to cover traditional radio broadcasters. The remaining sections of the legislation refine the new copyright standard by providing some limits and guidelines for future royalty payments.
Section 3 provides the most significant limitation on royalty payments from a student broadcaster’s perspective. It provides small commercial, noncommercial, educational and religious broadcasters with the option of paying a flat royalty payment. That flat fee would likely be less than the royalty payments the station would incur by paying royalties on a per-song basis. However, the House and Senate versions of Section 3 differ significantly.
Both versions of the bill allow small commercial stations, those with gross revenues of less then $1.25 million, to pay a flat royalty fee of $5,000. In the House bill, public broadcasting entities, including educational stations, can elect to pay a flat fee of $1,000.29 On the other hand, the Senate bill provides flat fees of $100 and $500 for public broadcasting entities with gross receipts of less than $50,000 per year and less than $100,000 but more than $50,000 per year, respectively.30 Like the House bill, public stations with gross receipts of more than $100,000 per year could pay a flat fee of $1,000 in the Senate version of the bill.31
On its face, the Senate version of the bill appears more beneficial to educational broadcasters. However, the language allowing royalty payments of less than $1,000 in the Senate version of the bill is not sufficiently clear. The bill uses ‘‘gross receipts’‘32 for the year to determine the level of royalty payments for educational broadcasters, but it does not define the gross receipts to be considered. The problem for many educational stations is that the language proposed could consider the gross receipts of the license holder — the university, college, or school in many cases. Such an interpretation would almost always put the station over $100,000 of gross receipts per year and subject the station to the highest level of royalty fees for public broadcasting entities.
It might seem obvious that the language in Section 3 of the Senate version of the Performance Rights Act refers only to the radio station’s budget. After all, educational stations have access to only the money in their budgets, not the budget of the entire school. However, the language in the bill does not define what entities receipts should be considered.
Clear legislation is in all parties’ best interest. As mentioned earlier, the DMCA experienced significant delays in implementation due to ambiguities in the original bill. The flat fees included in Section 3 of the Senate version of the Performance Rights Act are clearly an attempt to avoid the lengthy process of negotiation and litigation that occurred between the music industry and small commercial and noncommercial internet broadcasters after passage of the DMCA. If the language in the Performance Rights Act is unclear, it will likely suffer the same start-up difficulties as the DMCA.
The final section of concern for student broadcasters is Section 6. Section 6 governs the distribution of royalty fees among the copyright holder, the featured recording artist, and any nonfeatured performers on the sound recording. To ensure the proper distribution of royalty payments, copyright holders must include reports of the identity of artist, the International Standard Recording Code of the sound recording, the title of the work, the number of times it was transmitted, and the total amount of receipts collected from each licensee.33 As a result of this requirement, ‘‘copyright owners shall use reasonable good faith efforts to include in all relevant licenses a requirement to report’‘ the identification information.34 Section 6 will force educational broadcasters to maintain records of the identification information of each song played and provide those records to copyright holders at the time of royalty payments.
Understanding the PRA
For student broadcasters who believe their station will be harmed if Congress enacts the Performance Rights Act, it is still possible to have a voice in the outcome. Virtually every industry, profession, and labor group imaginable has an organization dedicated to advocating its interests. On the other hand, consumer oriented organizations are relatively few and far between. The lesson to take away from this disparity is that you are your own best friend in opposing legislative changes that negatively impact student broadcasting.
While letters from school administrators and petitions from listeners aren’t bad tools, the most effective voice will be the students and staff working at and running the station. Industry groups outnumber consumer groups because people involved in a business work on it every day, develop an expertise in it, and have a greater financial stake in its success than individual consumers. In this case, the student broadcasters are the experts in the field. You know what your station does on a daily basis, what services you provide to the community, and what the impact of additional costs and recordkeeping requirements would be on your station.
If you have concerns about the PRA, write a letter outlining the impact of the proposed legislation on your station. Schedule a meeting with someone at the state or district offices of your U.S. senators or representatives, or — if visiting Washington — with a congressional staff member. While it may seem obvious, a professional presentation and a professional appearance do matter.
Before writing a letter or scheduling a meeting, you should research the issue. An excellent resource is College Broadcasters, Inc. (www.askcbi.org), which closely monitors legal and regulatory issues impacting student broadcasters. Make a plan or an outline of what you want to talk about if you will be meeting with someone from your representative’s staff. Don’t be surprised to do most of the talking, and be prepared to answer questions and explain your concerns. You are the expert on student radio and possibly on this entire piece of legislation.
The arguments against imposing performance fees on terrestrial broadcasters, and in particular small nonprofit broadcasters, are relatively obvious ones. Radio stations provide the exposure the recording industry relies upon to distribute music and that the artists rely upon to sell out shows. Educational stations exemplify this benefit because they often play newer music instead of relying on older hits whose artists and labels already have an established brand.
The performance-rights debate can be viewed as an attempt to shift money from the still-profitable radio industry to the struggling recording industry. However, the radio industry is experiencing its own shift to digital technology. Some commentators predict that Internet radio will largely replace terrestrial radio in the next five to 10 years.35 The emergence of wireless technology will change the face of radio. The recording industry already has sound recording performance rights for online radio stations and webcasters. Imposing fees on terrestrial radio will have the effect of pushing some broadcasters online sooner and perhaps pushing other broadcasters out of business. It does not provide a long-term solution to the recording industry’s larger financial problems.
It is also important to help your representatives understand how recordkeeping requirements can uniquely impact campus broadcasters. Educational stations often experience significant turnover, which means constant training of new staff, and perhaps added risks of recordkeeping slip-ups that could prove costly. And it is important for legislators to appreciate what educational broadcasters provide to the community: airtime for new or local artists, hosting of free concerts and community gatherings, news coverage of campus events, a forum for campus groups to reach the student audience, exposure for sporting events under-covered by the professional media. Most importantly, remind your representative that educational stations serve as a laboratory where the staff learns everything from production and programming to sales and promotions.
For educators who advise student broadcasters, discussion of the Act can be a useful teaching vehicle to remind students of their obligation to pay for the music they use. Students raised in the file-sharing era sometimes have a casual attitude toward the use of copyright-protected material — or have been misinformed that there are formulaic ‘‘safe harbors’‘ below which a PRO cannot claim infringement. While it is possible to make a fair use of copyright-protected material and thus avoid liability for infringement, fair use is highly context-specific, and any blanket claim (e.g., ‘‘using less than 30 seconds of a song is always a fair use’‘) is a risky oversimplification. Numerical or percentage guidelines for the educational use of music in a classroom setting do not reliably apply once the instruction leaves the classroom and becomes publicly accessible on the airwaves or online. The music industry is among the most aggressive enforcers of copyright, and even a well-grounded claim of fair use may prove costly to defend.
Radio has proven itself an especially durable technology. In some ways, radio’s ability to reach listeners at home, at work, in the car, or anywhere else made it a forerunner to today’s wireless technology. Increasing access to wireless and digital technology will continue to push the radio industry to adapt, but an industry that has found its place among technological innovations from television to the Internet without becoming obsolete should be encouraged that it will find a place in digital society. The Performance Rights Act presents the possibility that stations could be charged a double performance fee for their terrestrial broadcast and their webcast as stations adjust to changing technology. It might also push some stations to move online sooner or risk going out of business. However, the Performance Rights Act will not destroy the radio format.
Seth Williams is a third-year law student at the University of Indiana and a former college broadcaster, who wrote this article as a volunteer law clerk with the SPLC.
1 See, e.g., Free Radio Alliance, http://freeradioalliance.org; Freedom Speaks, www.freedomspeaks.com/letter/701665/keep-radio-free; Stephen Koff, Recording artists and radio stations fight over royalties, air play and spin, The Plain Dealer, June 10, 2010, available at http://www.cleveland.com/open/index.ssf/2010/06/recording_artists_and_radio_st.html.
2 U.S. Const. art. I, sec. 8, cl. 8. ‘’[The Congress shall have power to] promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.’‘
3 See, e.g., Owen J. Sloane & Rachel M. Stilwell, Commentary, The Case for the Performing Rights Act, 32 L.A. Lawyer 52 (May 2009).
4 Koff, supra note 1.
5 Id. ‘‘The best friend of the record labels and recording artists has traditionally been radio, because that’s a three-minute commercial for a song.’‘’
6 Brian Day, Note, The Super Brawl: The History and Future of the Sound Recording Performance Right, 16 MICH. TELECOMM. & TECH. L. REV. 179, 209-10 (2009).
7 17 U.S.C. Sec. 102(a)(2) (2006).
8 17 U.S.C. Sec. 102(a)(7) (2006).
9 For a general survey of principles of copyright law as they apply to the campus media, see the Student Press Law Center’s ‘‘Student Media Guide to Copyright Law,’‘ available at http://www.splc.org/legalresearch.asp?id=32.
10 Day, supra note 6, at 182.
11 Id. at 182-83.
12 Id. at 183.
15 Id. at 182 (citing 17 U.S.C. Sec. 101 (2006)).
16 Shawn Murphy, Music & Money: The Invisible World of Music Publishing, Volunteer Lawyers and Accountants For the Arts, http://www.vlaa.org/?view=Music-and-Money-Shawn-Murphy.
18 Day, supra note 6, at 183.
19 Id. at 184.
20 Murphy, supra note 16.
21 Day, supra note 6, at 184-85.
22 Id. at 185.
23 Mark Hefflinger, SoundExchange Offers Discounted Royalties to Small Webcasters, Digital Media Wire, Aug. 22, 2007, http://www.dmwmedia.com/news/2007/08/22/soundexchange-offers-discounted-music-royalties-to-small-webcasters.
24 Day, supra note 6, at 187.
25 17 U.S.C. Sec. 106(6) (2006).
26 H.R. 848 , 111th Cong. Sec. 2(a) (2009); S. 379, 111th Cong. Sec. 2(a) (2009).
27 Id. at Sec. 2(b).
28 Id. (amending 17 U.S.C. Sec. 114(d)(1)(A)).
29 H.R. 848, 111th Cong. Sec. 3(a)(1)(E).
30 S. 379, 111th Cong. Sec. 3(a)(1)(E)(ii)(I-II).
31 Id. at Sec. 3(a)(1)(E)(ii)(III).
32 Id. at Sec. 3(a)(1)(E)(ii).
33 Id. at Sec. 6(1)(B)(ii)(I-V).
34 Id. at Sec. 6(1)(B)(iv).
35 Kara Swisher, Why Online Won’t Kill the Radio Star, THE WALL STREET JOURNAL, June 7, 2010 at R2.
Fall 2010, legal analysis, reports